Full Breakdown
Oil Prices Plunge After Report of US-Iran Peace Deal and Massive Pre-News Short Trades
5/7/2026, 4:12:44 AM
Core Event: Market Shock Following Near-Deal Report
At 4:50 AM ET on Wednesday, Axios reported that the United States was “close” to a memorandum of understanding to end the war with Iran. Within three hours, Brent crude fell 11.9% and WTI dropped more than 13%, with overall oil prices down over 12% by 7 AM ET.
Background & Context: Conflict and Recent Ceasefire
The United States and Iran have been in conflict, with a ceasefire in place since early April. Traders have repeatedly placed large crude-short positions minutes before breaking news, as seen in a $950 million trade on April 7 and a $760 million bet a week later, fueling speculation about a durable peace.
Data & Statistics: Scale of Short Positions and Price Decline
The Kobeissi Letter identified nearly 10,000 crude-oil contracts—about $920 million in notional value—opened at 3:40 AM ET, before any public announcement. Those shorts earned roughly $125 million as oil prices fell, with Brent at $101.93 and WTI at $95.06 by 10:20 AM ET, representing a 7% drop from earlier levels.
Official Statements & Responses: Iranian Dismissal
Iranian National Security and Foreign Policy Commission spokesperson Ebrahim Rezaei dismissed the Axios report, saying it represents “Americans’ wish list,” not the reality of negotiations.
Criticism & Opposition: Market Manipulation Concerns
Market observers questioned the timing of the trades. Former JPMorgan quant head Marko Kolanovic called the situation “blatantly manipulated markets,” while Ninepoint Partners partner Eric Nuttall warned that day-to-day volatility “may be intentionally induced for nefarious reasons.” Their remarks highlight doubts about the integrity of the price swing.
Conflicting Reports & Gaps: Divergent Views on Negotiations
Traders interpreted the Axios story as evidence of imminent peace, while the Iranian spokesperson rejected its premise. The report has not been corroborated by an official Iranian statement, and the timing of the large short trades remains unexplained, leaving analysts uncertain whether the price drop reflects genuine diplomatic progress or market exploitation.
Verbatim Quotes
- “At 3:40 AM ET today, nearly 10,000 contracts worth of crude oil shorts were taken without any major news. This is equivalent to ~$920 million in notional value, an unusually large trade for 3:40 AM ET. At 4:50 AM ET, just 70 minutes later, Axios reported that the US is” — The Kobeissi Letter
- “At 4:50 AM ET, just 70 minutes later, Axios reported that the US is "close" to a "memorandum of understanding" to end the Iran War.” — The Kobeissi Letter
- “Who knows what happens next in blatantly manipulated markets.” — Marko Kolanovic, former JPMorgan quant head
- “, as day-to-day volatility may be intentionally induced for nefarious reasons.” — Eric Nuttall, partner, Ninepoint Partners
- “Ebrahim Rezaei, Iranian spokesperson for the National Security and Foreign Policy Commission, said that the Axios report represents "Americans' wish list," not the reality of negotiations.” — Ebrahim Rezaei, Iranian spokesperson for the National Security and Foreign Policy Commission
What's Next: Anticipated Market Turbulence
Analysts warn that further market turbulence could arise this week as the peace negotiations unfold.
